French telecom equipment maker Alcatel is close to finalising a $32bn take-over of struggling US rival Lucent.

"Alcatel has made no secret of the fact that they want to become a powerful player in the US telecom marketplace

Jeffrey Kagan , telecom analyst

The deal would be the biggest ever European acquisition of a US technology company.

It would create a giant telecom group capable of taking on US company Cisco and Canadian group Nortel.

Alcatel and Lucent held negotiations throughout the holiday weekend and worked to settle final details, sources said.

The companies' boards are expected to vote on the deal on Tuesday, according to sources.

'Clean slate'

Assuming final negotiations proceed successfully, the deal would likely be announced on Wednesday - midday in Paris and before markets open in the United States.

The structure and timing of a deal still may change, sources cautioned.

Alcatel Chief Executive Serge Tchuruk would lead the combined company, while Lucent Chairman Henry Schacht would assume a lower but still senior position, a source said.

The deal will be characterised as a so-called "merger of equals", but sources said Alcatel clearly will be buying Lucent, which posted $4.7bn in losses in the first half of its current fiscal year.

Lucent, which carries a massive debt burden, has fallen behind Nortel and Cisco, due to management changes and product development problems.

Telecom analyst Jeffrey Kagan said: "It gives Lucent a clean slate to start over, and it gives Alcatel a big foot in the door in the US marketplace.

"Alcatel has made no secret of the fact that they want to become a powerful player in the US telecom marketplace.

"They have launched an aggressive advertising campaign to increase their awareness in the U.S. marketplace and have very aggressive plans."

Job cuts

The combined company is expected to be legally incorporated in Paris, but headquartered in Lucent's home of Murray Hill, New Jersey, sources said.

Lucent will have a say in the appointment of board members.

The combined company may get a new name, rather than taking either the Alcatel or Lucent brand names, sources said.

Although analysts expect the combined company to cut as many as 20,000 jobs as part of their efforts to slash $4 billion a year in operating costs, one source said no job cuts would be announced Wednesday.

A deal would face scrutiny from regulators in Washington, who would examine anti-trust issues.

Winning approval for the deal could take more than a year.

Alcatel could also be prevented from taking over Lucent's Bell Labs, which does projects for the US government, which could be vital to US national security.

Combining the French and US company also could be fraught with culture clashes and power struggles, analysts have said.